The field finds itself in a medium and long-term bearish price scenario, the design and desire of the authority is to give the consumer a break, and that includes a general price drop
Good morning Good afternoon Good night. Nice to greet you.
The price fight is the result of a poorly executed commercial effort and a lacking risk management structure. When you have to negotiate based on price, the goods in question lack value and end up being simply transactional and easily replaceable, in many cases this is the characteristic of the commodity.
Little value, and high substitution capacity, be it by someone local or foreign. Obviously, the above may seem simplistic or incomplete, especially in field activities in which there is a large degree of public intervention, protectionism, or tax burden.
The world’s agricultural producers work in the greatest possible uncertainty, the open-air factory a changing and volatile business center. If the negligence of many obtuse public policies is added to this, the negative result tends to multiply.
Today the world finds multiple production scenarios that seek to match disparate production with violated demand. The economies of the planet are trying to adjust the values of various goods to declines after a lacerating inflationary attack, the world’s economic authorities have intervened in the markets in various ways to stop the rise in prices and the result is not equitable in different regional economies.
The field today finds a bearish price scenario in the medium and long term, the design and desire of the authority is to give the consumer a break, and that logically includes a generalized price drop, which sadly comes at the wrong time.
The risk of the productive chains is to remain barefoot, and that the sale price falls before they can replace the production with lower costs.
Today, for example, the cost of fertilizers has fallen considerably, however, for what is produced at the moment, it had to be decided to buy in the past when prices were higher and if you did not have a mooring with covers, The downward price of sales mismatches your business structure.
And that’s where the drama comes in because a fair price is demanded, but with the current circumstances it is not correct.
The country businessman saw prices rise due to various forces and conditions that have left an adequate profitability zone, neither too much nor too little. If as a producer you liked that state of business, the obligation was to ensure profitability through coverage. And if.
Here comes the cost of toppings argument, but if you like peaches you have to put up with the fluff. Today, the drop in international prices offers better imported alternatives, and for production that is stuck in high costs and nostalgia for better prices, the scenario is not fair, and we agree.
But it is the right one given what we have at stake, and as the Bible says, worse things could come.
The second half of the year brings us the largest export space for Brazilian corn in history, the North Americans will be cultivating a new agricultural cycle that, if the weather does not oppose, is enough to replenish stocks.
The balance of risks presents a complicated horizon, but not defined. It is never too late for you to set these scenarios as the worst sales prices and wait for better conditions later on from the coverage.
And as a buyer, well, the roots of the trees don’t go to hell either, so setting current prices as ceilings, leaving yourself open to buying if the market falls later is not a bad strategy. You’re in good hands?
